Let’s start with the bus tours (organised to take potential buyers to various projects). You have been pushing the concept quite a bit and you launched one in Kisumu not long ago...

We started bus tours in 2009. Between 2009 and 2012, it was only in Nairobi. We partnered with developers we were financing to build houses for sale to take interested people to their developments. We started with one bus, now we do 10 to 12.

We then moved to Mombasa and Kisumu. We want to go to Eldoret, Nakuru and other major towns. We’ve done bus tours in Mombasa twice. We started with one bus. The first day the bus was full and we had to quickly look for another. Kisumu is also huge.

Are the bus tours open to your clients only?

No, they are open to everyone. Among the people who come are real estate agents who want to know where the houses are, university students doing architecture...

Do you get any business from the people you take on bus tours?

Yes. Some loan applicants tell us they heard about us during the bus tours.

You announced recently that you were getting into construction. Is KCB going into development by itself or through partners?

There are very few developers looking at the bottom of the market — houses that would go for Sh2 million, Sh3 million or Sh4 million. Essentially, our job is to finance projects (the supply side) and buyers (the demand side). But we realised that we need to do more. We are in the process of getting into developments through joint ventures. We are looking at county governments, Saccos and individuals who have large chunks of land. We want to go into both commercial and social housing.

How do you intend to approach the question of social housing?

That is a concept that is challenging even for governments
We plan to apply modern technology that will ensure the houses are in good shape and our turnaround time is very short.

If we produce enmasse, we enjoy economies of scale so the general cost of construction goes down and we want to pass that to the buyer. That is the social part of it. If you compare that and what is being done in the market, our houses will be cheaper. We are not doing this for purely profit. We also have a social responsibility to create dignity around our people.

You are funding developers. Won’t they feel that now you’re competing with them?

No, the country is only producing 50,000 housing units and the demand is 200,000. Most people are renting, probably less than 10 per cent of people own their houses. There is no competition; it is just a huge market. We will still continue supporting developers, but we will partner with some of them in joint ventures and similar arrangements.

Let’s talk about interest rates. The Central Bank of Kenya recently increased the KBRR rates to 9.87 from 8.54, then there’s the shilling’s slide. What is the way forward?

(Laughs) I know where you’re headed. Interest rates are just one the factors when it comes to the cost of housing, but it tends to be a very sensitive factor. Then again, we are still a primary market, where we generally lend the savings that come in. We don’t have a secondary mortgage market. We depend on savings, bonds... and it is difficult to have very low interest rates. What we do is try to keep our interest rates within a certain range. Even our adjustment is below the KBRR change.

We try to cushion our customers through different products. Now we have a bundled product where we are as low as 12.9 per cent. The average interest rates in the market are above 17 per cent. We see you as a customer. You come in for a mortgage, probably put it in your income/salary account, you probably have a children’s account, so the mortgage becomes a loss leader. The rates I have given you for a mortgage are actually a loss, if you came for a mortgage only.

As much as we want to bring down interest rates, it is very hard to act on your own. This has to be a Government initiative. But if we can reduce the cost of the house it would be even better.

For a long time, the number of mortgages has stood at about 20,000, despite statistics pointing to a growing middle-class. Is middle-class income really going into mortgages?

Mortgage buyers come to the bank specifically for home loans. Currently, we have about 25,000 mortgage accounts. Many Kenyans borrow from Saccos and build. The 50,000 housing units we talk about are not purely from mortgages. Mortgages have not grown because of the kind of houses.

High-end buyers purchase in cash. The middle-class and the lower-middle-class are the main mortgage candidates, but we don’t have affordable houses for them. For every mortgage you see, there is a house holding it. If there is no supply of that commodity, then the growth will not be there.